N.L. town mistakenly sold water system to company

The shed on the left containing the Town of Wabana 's public dispensing water system was erroneously included in the sale of the old fire hall next to it.

A company that purchased the old firehall property from the Town of Wabana on Bell Island last year stirred up some troubled water after they got their hands on the deed to the property.

In addition to the old firehall building, Beachstone Enterprises Inc. discovered they now owned the town’s nearly $400,000 Advanced Drinking Water System which is housed in a building next to the old firehall — all due to an apparent mistake made by the town.

The system inside the building is a potable water dispensing unit — a small-scale water treatment system that pumps and treats water from the municipal supply and stores the water for residents to collect at their convenience. The system was installed by the town a couple years ago cost-shared 90/10 by the provincial government and the town, respectively.

Beachstone Enterprises owner Jim Bennett said Monday that while the town is trying to “guilt” him into returning the water system, the sale was a binding legal agreement between the two parties.

“It’s on my deed. I bought a manufacturing property and all buildings and erections on it, now and forever, I think the deed goes,” Bennett said. “I purchased the property with the manufacturing building on it and the water station on it. The (water station) is in a small shed about 12 by 20 feet. And it’s a community clean drinking water dispensing unit.”

In a move in July that further stirred the waters, Beachstone Enterprises sent a lease agreement document to the Town of Wabana — in particular to Mayor Gary Gosine — outlining what the company would charge the town to access the water system. The terms of the lease agreement called for “rent” of $3,000 per month due on the first of each month, and a $50 per-day late fee should the rent not be paid on time. It also called for a security deposit of $2,500.

“The lease agreement in no way was to make any money,” Bennett said. “The lease agreement was to service the unit that’s on my property, when the unit fails. The unit itself is worth about $225,000. Parts are very expensive to replace. So what we are doing is going to be charging, if they want to use it, this amount of money that will go to future repairs and replacement of the unit to keep it going for the community.

“If they don’t want to use it, the company will try to raise the money to keep the system operating for the people of the town. I have no intention of shutting the water off for the people of the town. If the town doesn’t want to be part of this water system, then hopefully we can find corporate sponsors or try to raise money to keep the water going for everyone.”

Town minutes from 2016 show the town council issued a request for proposals regarding the original firehall rather than to have the building torn down because of its rundown condition. A committee that was overseeing the matter — members included Gosine, MHA David Brazil and town consultant Ed Kent — noted that if someone purchased the property there would be no expense to the town, as to heat and light or insurance costs, and the new business owners would make the upgrades required by Service NL. The town would also receive future revenue in the form of business tax, and the economic benefit of possible job creation.

Beachstone Enterprises was the only proposal received and the town voted to proceed with the sale.

Gosine said the request for proposals was only for the original firehall and the immediate land around it. He said Bennett’s company had, in fact built, the shed the water system is housed in and thus Bennett knew from the start that it wasn’t meant to be part of the firehall property sale.

Gosine said all options are on the table to reclaim the water system for the residents of Bell Island, including taking the case to Newfoundland Supreme Court and expropriation.

“The town has a law firm handling the case so, rest assured, it will be handled in a timely manner,” the mayor said. “It is with the lawyers, so I can’t speak too much about it.”

Earlier this month, the town’s lawyer sent a letter to Beachstone Enterprises Inc. stating that neither party intended that the water system was to be included in the sale. The lawyer indicated his firm was preparing to forward a “Deed of Rectification” to Beachstone to correct the erroneous conveyance of the water system. If Beachstone was not willing to sign the dead of rectification, the town would take the matter to Newfoundland Supreme Court.

Bennett, however, said he’s fed up with the town. He said since the whole thing transpired, no one from the town has even called him to discuss the issue.

“I’m very angry with this town and its MHA (David Brazil). This town has been trying to take us off this island the last year. Tourism (Bell Island) has been fighting us and boycotting us,” he said. “I’m in no way wanting to co-operate with this town.

“When we purchased the property they listed out some deficiencies with the property. We found many more deficiencies that cost us thousands of dollars and I’m sure in no way are they going to give us back any money. I’ve talked to a lawyer and was informed there’s not even a case there (for the town). I have the deed. The strongest law in the country is your property.”

Bennett said there’s more to the story than just the fact that he bought the property and now wants to lease the water system back to the town.

Beachstone Enterprises, in addition to manufacturing furniture and cabinets, and doing home renovations, also in the past worked to install similar water systems in many communities around the province. The company has been operating on Bell Island for 10 years.

Bennett said that after the company purchased the property and he became aware they owned the water system, he made an offer to the town to build another water system.

“They were wanting a second (advanced drinking water system) on the island and this year I emailed the leaders of the town and offered to build the town a complete unit worth $325,000 for absolutely free anywhere on the island,” he said. “And they laughed it off. We had provincial funding for the town for 90 per cent, and the town was to put in 10 per cent of its own money to get a second water station. I said to them that I would actually pay the 10 per cent. I told them it would cost them zero dollars and they laughed it off.”

Bennett believes residents of the town will not want council to spend their tax dollars on a legal case that they have little chance to win.

He said if they expropriate the land, the town will owe the company the money already invested in the property.

“But, that’s how this town works. ‘We may take back this land we sold you’,” Bennett said. “If that happens they will owe the company about $1 million because that’s what the company has invested in this building.

“And even through all this, even with the offer of that $325,000 unit, no one has ever called me. I had zero communication except for a lawyer’s letter which threatens to take me to Supreme Court. That’s the only word I’ve had from anybody. If the town wants to spend its tax dollars on taking me to court, then there’s a really good chance they’ll end up having to pay for my lawyer, too.”